Learning how to write a business plan not only leads to a great blueprint for running a company, it forces you to take a good look at how your business needs to be run. It can also be a "checklist" for ensuring your company gets on the right track - financially and structurally.
From a financial point of view, a business plan is, by design, a document that's meant to attract money and financing to your fledgling business - it's your sales pitch to deep-pocketed investors to provide the financial juice you need to get your business up and running.
Typically, business plans fall into two categories - traditional business plans and "lean startup" business plans.
- Traditional business plans: This type of business plan is comprehensive and thorough, and is a "step by step" examination of what your company is all about, and what it brings to the marketplace. A traditional business plan can be dozens of pages long.
- Lean startup business plans: This type of business plan is a thumbnail sketch, emphasizing the key points about your business. A lean startup business plan is often a bullet-pointed document that's only one page long.
Strategically, it may be best to use your lean startup business plan as a sales pitch to get financiers interested in your company. Once you've attracted their attention, then follow up with the more detailed, traditional business plan.
A Step-by-Step Guide to Creating a Business Plan
Follow these steps to write a business plan that meets your company's unique needs.
Step 1: Executive summary
This opening section kick starts your business plan and briefly outlines the key points of your plan. The goal here is to explain what your company does and why it will be successful. Include a company mission statement (i.e., what your ultimate goal is as a business, in just a sentence or two.)
Step 2: Business description
This section leads off the main portion of your business plan. In it, you'll go into more detail on what your company does and what solutions to brings to the marketplace. In this section, it's time to get specific and detail what product or services you're developing and what customers you're targeting. Include a brief history of your company and mention any top-level talent you have aboard to get your company off the ground.
Step 3: Market analysis
In this section, you'll detail the marketplace you'll be competing in. Where are the best opportunities in your market? What is the marketplace? Who are your competitors? What are their strengths and weaknesses? What is the leading marketplace product or service and what are you doing to improve on the leading products or services? Financing companies want to work with differentiators, and they'll want to know what separates your business from the pack. Here's the place to tell them exactly that.
Step 4: Company organization
How will your company operate (i.e., as a partnership or as a corporation, primarily) and who will be the key decision makers? How will the company be structured legally? What is the management hierarchy? Who has ownership of the company and at what percentage? These are the primary questions you'll need to answer in the company organization section of your business plan.
Step 5: Products or services provided
What will your company produce and how will it benefit customers? What kind of research and development have you already put into your company and what results are you getting - and expecting? Also, how will you market your product or service to customers? These are the questions you'll need to answer in this section.
Step 6: Financial outlook
In this section, you'll need to lay out your financial projections for your company. If your company is already up and running, list any income statements and cash flow numbers for the past several years, if possible. Do you have any loans outstanding? What does your balance sheet look like? What are your quarterly projections going forward? Company funders consider this the most important section of your business plan, so be thorough and as accurate as possible in presenting financial data to your readers - they'll be pouring over every word and every digit to judge whether there's a good business opportunity here or not.
Step 7: Summary
Close your business plan with a pitch for funding, and list any supporting data, graphs and charts that bolster your pitch. Make it clear what you're looking for financially from financiers - equity, a partnership or a loan. Provide a ballpark estimate of the funding you need and make it clear whether you're open to a negotiation. A company that knows how much money it needs will be taken as a serious one, and will be treated as such by funders and financiers.
Tips on Writing Your Best Business Plan
The best business plans cover the most ground in the least amount of time. Aim for the three "C's" in developing your business plan - provide clarity, be concise, and be compelling.
Hit the mark directly with these tips.
Find a good business plan blueprint
There's really no need to start your business plan from scratch. Use a solid online business plan like LivePlan, which walks you through the creation of your entire business plan.
Find good examples and adhere to their style
Find great examples of industry-specific business plans at online sites like Bplans or LivePlan.com.
Make sure you're factual
Don't "oversell" your company with inflated financial projections and pumped-up sales figures. Businesses that have invested in young companies have been around the block a few times and have a general understanding of what's realistic. If you claim sales figures twice as large as the competition, for example, they may well think you're not being realistic.
Be general and direct
A good business plan shouldn't have more than 25 or 30 pages, and many good one's clock in at 15 pages. Being overly technical and overly descriptive can add unnecessary copy to your business plan and keep readers from focusing on what really matters, like your company's organizations and how your product or services will sell in your market.
Check your copy thoroughly
Good grammar and spelling are absolutely imperative in a business plan. One missing comma or one misspelled word may be taken by readers as a sign of sloppiness. Hire a professional business writer and copy editor to make sure you have a clean and error-free business plan - good writing and editing will get noticed by readers, and in a positive way.